Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funder Whitney Tilson’s Three Short and One Long Picks

Whitney Tilson the founder of the New York based hedge fund Kase Capital Management recently shared the slide deck of his “Robin Hood” Investor’s Conference presentation. The slide deck not only gave a peek into Tilson’s view on the economy and markets, but also revealed his top long/short ideas and the reasoning behind them. Whitney Tilson is cautiously positioned with very low long exposure because he thinks that the markets are in the overvalued zone. He also thinks that investors are complacent with the CBOE Volatility Index trading at decade lows. He thinks that the markets are in for volatile times given the high degree of uncertainty due the Trump’s win, Brexit as well as rising populism across the world. Tilson also summarizes by saying that while Trump may be good for stocks in the short term, he may not be favourable over the long term. In the article below, we take a detailed look at three short and one long idea.

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).


Whitney Tilson has Exact Sciences Corporation (NASDAQ:EXAS) as his biggest short position and recently added to his position after the biggest insider sales of $25 million. He had in fact recommended this stock as a short two years ago when the price was $23.86, but had not covered his position despite the stock falling to as low as $5. The stock declined after the USA Preventive Services Task Force had not included the company’s only product “Cologuard” as a recommended test for Colorectal Cancer Screening. The stock recovered in July after the same task force gave an A grade to Cologuard and six other screening methods.

Whitney Tilson thinks that the stock is still a great short and that the target price of the stock is $3 a share (cash on its balance sheet). The main reason behind his bearishness on the stock is that he does not think that the company’s test is better than the mainstream “FIT” test, which is much cheaper (23 times cheaper) and covered by most insurers. Competition is increasing for Exact Sciences’ Corporation (NASDAQ:EXAS) product and the commercial payor adoption for Cologuard will be much slower than what is priced into the stock. The financials of this company are pretty bad with losses accelerating as the company spends heavily on marketing, only to generate a modest amount of revenues. The quarterly burn of Exact Sciences Corporation (NASDAQ:EXAS) was $154 million in 2015.

Follow Exact Sciences Corp (NASDAQ:EXAS)
Trade (NASDAQ:EXAS) Now!

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.